Managed care and reductions in government spending have increased the need to reduce health care expenditures. Consequently, drug treatment programs have had to reduce treatment length of stay and to provide fewer treatment services. Although it is vitally important to understand how these changes in treatment services are affecting outcomes and, more specifically, which treatment services are most cost-beneficial, surprisingly little work has been done that systematically examines these issues. While previous studies have developed approaches for determining whether drug treatment itself is cost-beneficial, they have not examined the economic effects of individual treatment services. Our proposed analysis of an existing database offers a systematic approach aimed at estimating the effect of individual treatment services on economic outcomes and at determining which services are most cost-beneficial. By focusing on individual services, this approach fills a gap in the research and aims at extending the economic model of drug treatment. The results of the study should provide important information to policymakers and treatment providers on the relationship between treatment services and outcomes, thereby aiding them in designing service packages that maximize outcomes per dollar spent on treatment. Data for this analysis come from the National Treatment Improvement Evaluation Study (NTIES). Composed of data collected from 1992 through 1995, the NTIES database is one of the largest existing resources for the detailed study of treatment services at both the patient level and the service-utilization level. Because both the programs and the patients in NTIES were heterogeneous, we will focus this work on the largest treatment modality-outpatient drug-free. The specific aims of our analysis are 1) to estimate whether the amount of each treatment service provided to drug-treatment patients is related to economically important outcomes (employment and criminal behavior); 2) to determine whether the relationship between the amount of each treatment service provided and outcomes is linear or nonlinear; and 3) to compare the incremental tangible benefits to the incremental cost of each treatment service to assess whether each of these services is cost-beneficial.